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If it's Tuesday, it must be Beijing or Tokyo or London or Rome. Or maybe Zurich, this time, for Laurence Fink, the indefatigable, globe-trotting head of New York-based
BlackRock,
BLK -0.6139635968486824%BlackRock Inc.U.S.: NYSEUSD365.84
-2.26-0.6139635968486824%
/Date(1427835709622-0500)/
Volume (Delayed 15m)
:
415584AFTER HOURSUSD366.5172
0.6772000000000280.18510824404111087%
Volume (Delayed 15m)
:
11589
P/E Ratio
18.684371807967313Market Cap
60885581060.2112
Dividend Yield
2.383555652744369% Rev. per Employee
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the largest money manager in the world. Fink is everywhere these days, visiting with clients, counseling governments and central bankers and managing a sprawling business that oversees $3.7 trillion of assets. All this has given him a unique perch from which to analyze and help shape the global financial markets.

As those markets gyrated last week—the S&P 500 fell 6.6% on Monday, wiping out around $1 trillion of value—Fink was vacationing with his family in Colorado, where he has a home. At least that was the plan. "I wouldn't call it a vacation, unfortunately," says the BlackRock CEO, one of Wall Street's biggest power players. "This week, I've been on the phone heavily with government officials, finance ministers and central bankers." On Thursday, he headed back East for meetings in Washington.

Fink also spent some time last week talking with Barron's, resuming a conversation we had begun some weeks before in BlackRock's sleek midtown Manhattan headquarters. The market's turmoil, he says, has left him discouraged about governments around the world, and their ability to do the right thing. "The markets world-wide are unsettled because of inaction and really bad results from government," he says. "We did not see leadership world-wide."

Washington's protracted brawl over the U.S. debt ceiling and deficit reduction "truly showed how dysfunctional our government has become," Fink added. "We lost one of the main foundations for investing—the certainty of good government." And the problem hardly is confined to the U.S.; European leaders, he says, need to "create confidence" for investors, not turn to short-term fixes for the European Union's worsening debt woes.

That said, this former mortgage trader prefers stocks over bonds. "Do I believe equities here represent a good opportunity?" he says. "Absolutely. You have companies trading with dividend yields above 5%. With interest rates as low as they are, equities are a very powerful alternative for income, long-term inflation protection and price appreciation."

Fink, who founded BlackRock's predecessor firm in the late 1980s after a fabled—and somewhat notorious—career as a trader of mortgage-backed securities, has earned the respect of those he advises because he tells it as he sees it, and he sees almost everything. "With Larry, you get two important things: candor, and he doesn't just talk his own book," says Jim Wilkinson, chief of staff for former U.S. Treasury Secretary Hank Paulson. "You get advice from him based on his views of the global financial system and what he's seeing."

The son of a shoe-store owner and a college professor, Fink hardly seemed destined to become a consummate Wall Street insider, much less a consigliere in capitals around the world. He didn't even arrive at First Boston, his first employer, as a freshly minted Harvard or Wharton M.B.A.—a typical path to the Street—but as a graduate of the business school at UCLA.

Fink grew up in Los Angeles, attended public schools and had "a very middle-class upbringing," he says. That included selling shoes when he was 10. "I wasn't aware of it at the time, but what I learned was an ability to communicate at a young age, and responsibility," he says.

Arriving in New York in 1976, Fink quickly mastered the intricacies of trading mortgages at First Boston, at a time when few investors understood them. "I had to educate my clients," he recalls, "because no one knew about mortgage securities."

A rising star, Fink built mortgage-backed securities into one of the firm's most profitable groups. But his star faded quickly after his group made a bad bet on interest rates in 1986, losing a reported $100 million. "I was not the trader, but the desk reported to me. I was the captain of the ship. It was my responsibility. You have to go down with the ship as the captain."

In early 1988, Fink, then still in his mid-30s, launched his own money-management shop. Known as Blackstone Financial Management, it was affiliated with the Blackstone Group, an elite private-equity firm led by Peter Peterson and Stephen Schwarzman. The two entities went their separate ways in 1994 after Fink and his colleagues had a dispute with Blackstone over getting enough equity to become full partners in a combined organization.

That separation was hardly cordial, but Fink had learned plenty from Schwarzman and Peterson. "I learned from Steve that when there is a problem you have to be relentless in trying to cauterize that problem," he says. He learned from Peterson how important it is to have a strong connection with clients.

BlackRock (BLK) went public five years later, in 1999, with assets under management of about $165 billion, less than 1/20th its current size. Since then, Fink and his team have built an asset-management colossus, in part through the shrewd acquisitions of Merrill Lynch Asset Management in exchange for 49% of BlackRock's stock, in 2006, and Barclays Global Investors for $13.5 billion, in June 2009.

Formerly a fixed-income shop focused on institutional clients, BlackRock gained expertise in equities and a retail clientele in the Merrill deal. And with the addition of Barclays Global Investors, which BlackRock scooped up at an attractive price when Barclays needed cash to shore up its balance sheet, the firm became an instant leader in passive products, including index funds and ETFs, and quantitative strategies, complementing its fundamental approach. "In our two big mergers, there were very few redundancies," he says. "And that's where other firms went wrong: redundancy on the product side."

Another common thread in the deals was that BlackRock acquired asset managers that "were trapped in large financial-services companies," he says. "We are in asset management and risk management; that's it."

Beware Bureaucracy and Bloat

BlackRock, which was launched 23 years ago with fewer than a dozen people and zero assets under management, now has 9,700 employees in 26 countries. And that has Fink working hard to fight the trappings–notably bureaucracy and bloat–that often hobble organizations as they grow exponentially.

"We need to prove to our clients that scale is a virtue, not a detractor. The only reason scale could be a virtue is if we connect all of the global information that we have," including billions of asset flows.

To accomplish that, BlackRock invested heavily to bring the combined organizations together on a single technology platform—a challenge that Fink called "very expensive." But worth it. Using one platform, he says, makes it easier for employees to share information, making BlackRock better at investing and providing "better information to our clients."

That, in turn, has translated into eye-popping returns for shareholders. Since BlackRock's initial offering, its shares are up 1,200%, or 24% annually, including reinvested dividends. That compares with a 16%, or 1.25% annual, return for the broad market. Fink, who has amassed considerable wealth at the helm of BlackRock, owns a stake worth about $289 million.

BlackRock earned $875 million in 2009. Last year, the first full year with Barclays Global Investments in the fold, profits topped $2 billion and are expected to reach $2.4 billion this year and $2.7 billion in 2012. On a per-share basis, that's $12.74 this year and $14.58 in 2012.

The company's shares recently traded at 162.

Helping to boost BlackRock's growth is a broader product mix, which now includes a slew of active and passive funds in stocks, bonds and multi-asset categories. Some three-quarters of the $3.7 trillion under management is with institutional clients, but the firm's retail business is growing, helped partly by iShares.

About half of BlackRock's assets are now in passive strategies, but Fink is "indifferent with my clients in terms of active or passive," he observes, adding that it depends on what the clients need and on their risk orientation.

As the biggest asset manager around, BlackRock is a major target for rivals, be it Vanguard in the ETF market or Pimco in fixed income. "I don't focus at all on my competitors," says Fink, who is known for his intense competitive drive. "I don't even care about what my competitors do. What I do care about is that, if we do our job well for our clients, we'll be fine."

BlackRock's massive size and reputation have brought the firm a wide range of clients, including pension funds, foreign governments, sovereign wealth funds and the Federal Reserve, which tapped it in March 2008 to manage $30 billion of distressed mortgage securities that had been held by the failed investment bank Bear Stearns. But size can also be a liability. Institutions, complying with mandates that limit their exposure to any one asset manager, have pulled out billions of dollars from BlackRock over the past 18 months, though those outflows are subsiding.

Ten-Year Plan

Fink says he's working harder today than he did in his First Boston days, crisscrossing the globe two weeks a month to visit clients. Still, it's a bit surprising that when the subject of retirement comes up—often a sore point when it comes to successful founders and CEOs—Fink says that "it's entirely probable" that he won't be working at BlackRock in 10 years. "I am not a person who wants to be here and run it until I die," he continues. "I am a grandfather today, and I get a lot of pride watching my daughter raise her son. I will have just as much pride—in fact, it will probably make me happier–when I see this firm doing better without me."

Another of the CEO's passions is collecting American folk art, most notably weather vanes. He cites naiveté as a big reason for their appeal, ironic, perhaps, for someone who is anything but. "These were not made by noted artists," says Fink. "These were people who wanted to decorate their house with whatever means they had."

And as with all collecting, practicality is not a consideration. Larry Fink doesn't need a weather vane to know which way the wind blows.